UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
AND EXCHANGE ACT OF 1934
Date
of
Report (Date of Earliest Event Reported) March 8, 2007
HUB
GROUP, INC.
(Exact
name of registrant as specified in its charter)
DELAWARE
(State
or
Other Jurisdiction of Incorporation)
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0-27754
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36-4007085
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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Downers
Grove, Illinois 60515
(Address
and zip code of principal executive offices)
(630)
271-3600
(Registrant’s
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM
1.01 Entry into a Material Definitive
Agreement
On
March 8, 2007, the Company's wholly-owned subsidiary Hub City Terminals,
Inc. entered into an Equipment Purchase Contract with Singamas Management
Services, Ltd. and Singamas North America, Inc. for the acquisition of 2,000
53'
containers. The Company expects the acquisition costs to be approximately $19.4
million. The Company expects to take delivery of the equipment starting in
May
2007 and anticipates financing the equipment through an operating
lease.
The
foregoing summary is qualified in its entirety by reference to the Equipment
Purchase Contract, which is attached hereto as Exhibit 10.1.
The
following documents are filed as part of the report:
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(a)
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Not
Applicable.
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(b)
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Not
Applicable.
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(c)
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Not
Applicable.
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(d)
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A
list of exhibits filed herewith is contained on the
Exhibit
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Index
which immediately precedes such exhibits and is
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||
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incorporated
herein by reference.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
HUB GROUP, INC.
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DATE:
March 12, 2007
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By
/s/
David
P. Yeager
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David
P. Yeager
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Chief
Executive Officer and Vice Chairman
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EXHIBIT
INDEX
Exhibit
No.
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10.1
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Equipment
Purchase Contract, dated as of March 8, 2007, by and between Hub City
Terminals, Inc., Singamas Management Services, Ltd. and Singamas
North
America, Inc.
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Exhibit
10.1
Equipment
Purchase Contract
This
Equipment Purchase Contract, together with the exhibits attached hereto (this
“Contract”) is entered into as of March 8, 2007 by and between Hub City
Terminals, Inc., located
at 3050 Highland Parkway Suite 100 Downers Grove, IL 60515, U.S.A. (“Buyer”),
Singamas Management Services, Ltd., located at P.O. Box 71, Craigmuir Chambers,
Road Town, Tortola, British Virgin Islands (“Seller”) and, for purposes of
ARTICLE 11 only, Singamas North America, Inc., located at 2410 Camino Ramon,
Suite 135, San Ramon, CA 94583 (“Old Seller”).
WHEREAS,
Buyer and Old Seller entered into that certain Equipment Purchase Contract,
dated as of March 8, 2006 (the “2006 Purchase Contract”) pursuant to which Buyer
purchased Containers (as defined hereinafter) from Old Seller;
WHEREAS,
Old Seller and Seller are corporate affiliates; and
WHEREAS,
Buyer and Seller desire to enter into this Contract pursuant to which Buyer
shall purchase Containers from Seller.
Buyer
and
Seller agree as follows:
ARTICLE
1. Specification;
Equipment; Contract Price; Scheduled Delivery Dates; Pool
(a) Pursuant
to ARTICLE 2 of this Contract, Buyer and Seller agree to develop on a joint
basis the Specification (as defined in ARTICLE 2(a)) for the manufacture of
the
steel containers described in Exhibit A (collectively, the “Equipment” and each
individually, a “Unit” or “Container”).
(b) Seller
covenants and agrees to manufacture, at the Singamas plant located at Qingdao,
China, or at such additional plants as may be approved by Buyer (collectively,
the “Plant”), the Equipment in accordance with the Specification developed
pursuant to ARTICLE 2, and shall sell and deliver the Equipment to Buyer at
Buyer’s depots as set forth in Exhibit A (“Buyer’s Depots”), or to such other
locations as may be agreed to between Buyer and Seller (collectively, the
“Authorized Delivery Locations”), in accordance with the scheduled delivery
dates set forth in Exhibit A, as the same may be modified only by mutual
agreement in writing pursuant to ARTICLE 2(d), 3(b) or 4(a) (as modified,
the Scheduled Delivery Dates), at Seller’s risk and expense as provided in this
Contract, all for the consideration
specified in Exhibit A. The contract price for deliveries of Units during each
applicable month shall be determined by multiplying the price per Unit purchased
and delivered during such month (set forth in Exhibit A as the
“Unit
Price”),
by the number of Units delivered to Buyer during said month (the
aggregate price thus computed, the “Contract Price”). Time is of the essence of
this Contract.
ARTICLE
2. Specification;
Prototype; Interpretation; Changes
(a) On
or
before March 10, 2007, Buyer and Seller agree to jointly develop and produce
design and construction specifications (the “Specification”) for the manufacture
of the Equipment. The Specification shall satisfy the standards of the
Association of American Railroads set forth in Exhibit B hereto (as amended
from
time to time, the “Standards”). The Specification shall be subject to final
approval in writing of both Buyer and Seller. The terms and provisions of the
Specification approved by both Buyer and Seller in writing shall be incorporated
into this Contract by this reference. Seller agrees that the parts for the
Equipment will be interchangeable with the parts of the 53 foot containers
Buyer
purchased in 2005 and 2006.
(b) The
Specification shall define the principal characteristics of the Units of
Equipment, which at the time of each delivery shall be suitable for commercial
use in carrying freight in highway and rail transportation. The Specification
shall be interpreted to accomplish this objective.
(c) If
any
discrepancy, difference or conflict exists between the provisions of this
Contract and the Specification, then, to the extent of such discrepancy,
difference or conflict only, the Specification shall be ineffectual and the
provisions of this Contract shall prevail; but in all other respects, the
Specification shall be in full force and effect. Any question whether the
Specification is in conflict with the provisions of this Contract shall be
brought to the attention of Buyer who shall resolve such conflict or discrepancy
and give direction in writing to Seller how to proceed, and Seller shall comply
with such directions. Seller shall not depart from the requirements of the
Specification without the prior written authorization by Buyer.
(d) Buyer
may
propose a change in the Specification for the Equipment. Within five (5)
business days after receipt of Buyer’s proposal for a change, Seller shall
prepare and submit to Buyer an estimate (the “Estimate”) in such detail as Buyer
may reasonably require, which shall contain (i) a description of the change,
including any changes to the Specification or in the Equipment, (ii) the net
increase or decrease in the Unit Price and the Contract Price, and (iii) the
effect of the change on the Scheduled Delivery Dates. Buyer shall accept or
reject the Estimate within five (5) business days. If the Estimate is accepted,
Buyer shall prepare, and Buyer and Seller shall execute, a contract change
(the
“Contract Change”), which shall contain a description of the change, including
any changes to the Specification or the Equipment, the effect on the Scheduled
Delivery Dates and the effect on the Unit Price and the Contract Price. If
Buyer
does not notify Seller of Buyer’s acceptance or rejection of any Estimate, or if
Buyer rejects an Estimate, this Contract and the Specification shall continue
to
remain in full force and effect notwithstanding the parties’ failure to agree to
such Estimate, and the parties’ shall continue to work reasonably and in good
faith (but shall not be obligated) to reach a mutually acceptable agreement
with
respect to such proposed changes.
ARTICLE
3. Excusable Delay; Extension of Time; Right of Cancellation
(a) If
either
Buyer or Seller is delayed in making or taking delivery of any Unit of Equipment
as a result of any “Excusable Delay” (as defined in the next
sentence),
Buyer
and Seller shall not be liable for such failure or delay and the Scheduled
Delivery Dates shall be extended in the event Seller or Buyer shall have given
written notice to the other party within the time periods specified in ARTICLE
3(b) of the Excusable Delay (subject however to Buyer’s cancellation rights in
ARTICLE 3(c)). An “Excusable Delay” as to any party shall mean a delay in the
delivery of the Equipment caused solely by the other party or by the occurrence
of an event of delay beyond the control of such party which such party is unable
to prevent through the exercise of due diligence, which delay is attributable
to
(i) acts of God (other than ordinary storms or ordinary inclement weather
conditions), earthquakes, lightning or flood; (ii) explosions, fire or
vandalism, provided such explosion, fire or vandalism did not result from the
gross negligence or willful misconduct of Seller; or (iii) strikes or other
similar industrial disturbances (not including any strikes or industrial
disturbances resulting from unilateral changes made by Seller or its affiliated
companies), riots, insurrections, war, sabotage, blockages or embargoes, and
epidemics.
(b) Upon
the
occurrence of an Excusable Delay, written notice shall be given by Seller to
Buyer within five (5) days (i) after knowledge thereof or (ii) after the date
on
which Seller, after reasonably diligent inquiry, should have known of such
Excusable Delay, whichever is the earlier date. Upon the cessation of any
Excusable Delay, written notice thereof and of the anticipated effect thereof,
if any, on the Scheduled Delivery Dates shall be given by Seller to Buyer within
five (5) days. The failure of Seller to give the required notices within the
periods specified by this ARTICLE shall constitute a waiver by Seller of its
right to seek an extension of the Scheduled Delivery Dates. Buyer shall notify
Seller, within five (5) days after receipt of Seller’s notice, of Buyer’s
agreement or disagreement with Seller’s claim for extension of the Scheduled
Delivery Dates. If Buyer and Seller agree on the adjustment of the Scheduled
Delivery Dates, Buyer shall prepare and Buyer and Seller shall execute a
Contract Change reflecting such agreement.
(c) In
the
event that any of the following events shall occur (each a “Cancellation
Event”), Buyer shall have the right, in addition to any other rights it may have
under the law or any other provisions of this Contract, to cancel this Contract
with respect to all remaining undelivered Units of Equipment:
(i) an
Excusable Delay shall have occurred and such Excusable Delay shall have
continued for more than one hundred twenty (120) days; or
(ii) Seller
shall fail to complete the manufacture of any Units and make them available
for
inspection by Buyer or Buyer’s Inspectors pursuant to ARTICLES 6(a) and (b), at
least thirty-five (35) days prior to the respective Scheduled Delivery Dates
for
such Units; or
(iii) Seller
shall fail to deliver any Units to Buyer at an Authorized Delivery Location
pursuant to ARTICLE 7 within sixty (60) days after the respective Scheduled
Delivery Dates for such Units.
(d) In
the
event of any cancellation of this Contract pursuant to ARTICLE 3(c), Buyer
shall
have no liability to Seller for payment of any part of the Contract Price for
the Units of Equipment which have been cancelled and Seller shall have no
further liability to Buyer to deliver such Units of Equipment; provided that
any
such cancellation shall not terminate any rights that may have accrued to Buyer
under this Contract prior to cancellation.
ARTICLE
4. Prototype;
Inspection and Testing
(a) By
March
20, 2007, Seller shall manufacture one prototype Unit of Equipment conforming
to
the Specification, this Contract and the Standards (the “Prototype’) and Seller
shall perform all tests on the Prototype as required to obtain certification
by
Buyer’s designated certification and inspection organization (“Buyer’s Survey
Agency”) and to enable Buyer to determine insofar as is practicable whether the
Unit of Prototype conforms to the Specification, this Contract and the
Standards, including without limitation the tests specified in Exhibit C. Seller
shall bear the expense for inspection and testing of the Prototype. In the
event
that, in the sole opinion of Buyer, the Prototype conforms to the Specification,
this Contract and the Standards, Buyer shall notify Seller that the Prototype
and Specification are acceptable, the Specification shall not be modified and
the remaining Units shall be manufactured in accordance with the Specification,
this Contract and the Standards. In the event that, in the sole opinion of
Buyer, the Prototype does not conform to the Specification, this Contract or
the
Standards, Buyer shall notify Seller in writing as to any deficiencies in the
Specification and/or the Prototype and Seller shall, at Seller’s expense, (i) in
respect to any deficiencies in the Specification and/or the Prototype, work
with
Buyer to first make any necessary changes to the Specification (which changes
must be agreed to by Buyer and Seller), and repair or replace the Prototype
as
necessary to conform to the Specification as so changed, or (ii) in respect
to any deficiencies in respect to the Prototype but not the Specification,
repair or replace the Prototype as necessary to conform to the Specification,
this Contract and the Standards. Following any repair or replacement of the
Prototype pursuant to this ARTICLE 4(a), Seller shall perform the tests on
the
repaired or replaced Prototype pursuant to this ARTICLE 4(a), and Buyer shall
be
entitled to the same rights under this ARTICLE 4(a) in respect to the repaired
or replaced prototype as the original Prototype.
(b) Within
fifteen (15) days after confirmation by Buyer that the Prototype conforms to
the
Specification, this Contract and the Standards pursuant to ARTICLE 4(a), but
in
any event no later than thirty (30) days prior to commencement of production
of
the Equipment, Seller shall submit to Buyer four (4) copies of the final
Specification for the Equipment being purchased under this Contract, consisting
of the original Specification and any changes pursuant to ARTICLE 2(d) or 4(a).
The final Specification shall be identified by number and dated, and shall
include: the Seller’s production model number, list and copies of applicable
working drawings with drawing number, a general arrangement drawing of the
Equipment, and a marking drawing for production. Seller shall deliver the final
Specification and working drawings to Buyer not less than thirty (30) days
prior
to commencement of production.
ARTICLE
5. Work and Materials; Subcontracting; Production Schedule; Inspection and
Tests
(a) All
work
performed on the Equipment shall be in accordance with good commercial practice
and all material, supplies and equipment incorporated in the Equipment shall
be
new, suitable and of the best quality for the service intended. Seller agrees
that the standards, test and quality control procedures used in the manufacture
of the Equipment shall at least equal those demonstrated to Buyer during any
inspection of the Plant by Buyer, or if Buyer shall not have inspected any
such
Plant, then at least equal to those extended or warranted by Seller to its
other
customers in the United States. Seller agrees that Buyer’s inspectors or agents
shall be allowed access to the Plant to witness production and quality control
at all reasonable times.
(b) Seller
shall not subcontract its obligations under this Contract to manufacture the
Equipment without the prior written approval of Buyer. In the event that Seller
desires to subcontract the manufacturing obligations, Seller shall advise Buyer
of the name of the proposed subcontractor at least thirty (30) days in advance
of any initial production and shall provide Buyer with such other information
about the proposed subcontractor as Buyer may reasonably request. If a
subcontractor of the Equipment is consented to under this ARTICLE, such
subcontractor shall be deemed included within the term “Seller” in this Contract
and Seller and such subcontractor shall be jointly and severally liable for
any
and all obligations of Seller and such subcontractor under this Contract, but
Buyer shall not be required to respond or look to, or deal with, such
subcontractor and shall be entitled to respond or look only to, and deal only
with, the original Seller named in this Contract with respect to the performance
and enforcement of Seller’s and such subcontractor’s obligations and rights
under this Contract.
(c) All
Equipment and all workmanship, materials, supplies and equipment incorporated
therein shall be subject to inspection and tests by Buyer, Buyer’s Survey Agency
and other inspectors (collectively “Buyer’s Inspectors”) at any reasonable time
during manufacturing at the Plant. All Equipment, materials, supplies,
workmanship and equipment not conforming to the requirements of the
Specification, this Contract and the Standards shall not be permitted, without
Buyer’s written agreement and approval in its sole discretion.
ARTICLE
6. Technical
Acceptance
(a) Seller
will inform Buyer in writing ten (10) days before the date on which Seller
believes the units will be ready for Buyer’s Inspectors.
(b) Following
completion of the manufacture of each Unit at the Plant, Seller shall notify
Buyer in writing of such completion and Seller shall arrange to allow Buyer’s
Inspectors to undertake an initial inspection of such Unit to determine whether
such Unit is in conformance with the Specification, this Contract and the
Standards.
(c) If
Buyer’s Inspectors shall determine that a Unit is in conformance with the
Specification, this Contract and the Standards following the initial inspection
at the Plant pursuant to ARTICLE 6(a), Buyer’s Inspectors shall issue and
deliver to Seller and Buyer a certification in the form attached hereto as
Exhibit D (the “Inspection Certificate”), or otherwise confirm that in the
opinion of Buyer’s Inspectors, the Units of Equipment identified therein comply
with the Specification, this Contract and the Standards.
If
Buyer’s
Inspectors determine that the Equipment is not in conformance with the
Specification, this
Contract and the Standards, Buyer’s Inspectors shall notify Buyer and Seller of
their determination in writing, and shall identify any non-conformities, and
Seller shall promptly repair or replace any non-conforming Units with conforming
Units, which will then be subject to further inspection pursuant to ARTICLES
6(a), (b) and (c).
(d) Unless
otherwise agreed by Buyer in writing, the failure of a Unit of Equipment, or
materials, supplies and equipment thereof, in a test shall, at Buyer’s option,
be considered the failure of each Unit in the same production series. Seller
shall bear all costs to test, correct or replace such Units. Seller shall
promptly correct or replace all rejected Equipment, and materials, supplies
and
equipment related thereto, such correction and replacement to be to the
satisfaction of and without cost to Buyer.
(e) Buyer
shall pay the cost of Buyer’s Inspectors under this Contract, other than for the
costs of tests of the Prototype pursuant to ARTICLE 4(a) and as provided in
the
next sentence, which costs shall be paid by Seller. If Buyer’s Inspectors
determine that a Unit of Equipment fails to conform to the requirements of
the
Specification, this Contract, or the Standards, the costs and charges of the
original tests, any additional tests and work and materials in connection with
the correction and/or replacement of the Equipment shall be paid by
Seller.
ARTICLE
7. Delivery
of Equipment
(a) Following
the manufacture of Units and technical acceptance thereof by Buyer pursuant
to
ARTICLE 6(c), Seller shall ship such Units to the Authorized Delivery
Location for delivery to Buyer (or Buyer’s assignee if Buyer shall have assigned
its rights under this Contract in respect to such Units of Equipment).
Notwithstanding anything to the contrary contained in this Contract, title
to
each of the Units to be delivered to Buyer (or its assignee) at the Authorized
Delivery Location shall transfer to Buyer (or its assignee) automatically and
without further action at such time as each such Unit first crosses 125 degrees
west longitude, and in any event immediately prior to the time the vessel
carrying such Units leaves international waters and enters the territorial
waters of the United States of America or of any state thereof. Subject to
the
terms of this ARTICLE 7, Seller shall transfer physical possession of the Units
to Buyer (or its assignee) at the Authorized Delivery location by the applicable
Scheduled Delivery Date (Units so transferred, the “Delivered Units”).
(b) Following
arrival of any Units described in ARTICLE 7(a) at the Authorized Delivery
Location, Buyer shall have an opportunity to re-examine such Units to determine
that they still conform to the Specification, this Contract and the Standards.
If such inspection does not disclose any damages to any of the Units, an
Equipment Interchange Receipt (“EIR”) shall be issued upon release of such Units
from a discharging terminal to Buyer or Buyer’s motor carrier or drayman at the
Authorized Delivery Location. Damage occurring prior to and during the lifting
of any Delivered Units onto a chassis shall be Seller’s
responsibility.
(c) For
Units which are delivered to an Authorized Delivery Location in apparent
good
order, Buyer’s agent shall issue an EIR for each Delivered Unit with the
notation “Delivered in apparent good order.” All Delivered Units shall be
considered delivered upon the earlier of (i) the execution of the EIR by
Buyer’s agent, or (ii) the date payment of the Contract Price for such
Units is due and payable pursuant to ARTICLE 11 below, at which time risk
for
such Units of accepted Units of Equipment shall pass to Buyer (or Buyer’s
assignee if Buyer shall have assigned its rights under this Contract in respect
to such Units of Equipment).
(d) If,
upon
arrival of any Units at an Authorized Delivery Location, Buyer or Buyer’s
Inspectors determine that any of the Units are damaged, Buyer will report such
damage to Seller immediately and notify such damage to the terminal and Seller
will repair or replace any damaged Units pursuant to ARTICLE 7(f). In the
event Seller chooses or is required to replace any damaged Unit under this
Contract, the prior transfer of title to such damaged Unit pursuant to clause
(a) hereof shall be rescinded and title to such damaged Unit shall automatically
revert to Seller without any recourse to, or warranty of, Buyer. In such case,
Buyer shall have not right, title or interest of any kind to any damaged Unit
to
be replaced by Seller pursuant to this clause (d).
(e) Notwithstanding
the delivery of a Delivered Unit by Seller to Buyer or issuance of an EIR for
such Delivered Unit by Buyer pursuant to this ARTICLE 7, if Buyer discovers
that
any such Delivered Unit was damaged or otherwise did not conform to the
Specification, this Contract and the Standards at the time it was delivered
by
Seller and Buyer notifies Seller within thirty (30) days following such
delivery, Seller, at its sole cost and expense, shall promptly repair or replace
such Delivered Unit. Upon a determination pursuant to clause (f) hereof that
a
Unit is non-repairable and, therefore must be replaced, the prior transfer
of
title to such Unit shall be rescinded and title shall automatically revert
to
Seller, without any recourse to, or warranty of, Buyer. In such case, Buyer
shall have no right, title or interest of any kind to any damaged Unit to be
replaced by Seller pursuant to this clause (e).
(f) In
respect to any Units that Seller is obligated to repair or replace pursuant
to
this ARTICLE 7, if the estimated cost of the repair of any Unit in the
reasonable determination of Buyer is over the Damage Threshold specified in
Exhibit A (the “Damage Threshold”), such Unit shall be considered non-repairable
and Seller shall promptly, at Seller’s expense, replace such Unit with a Unit
that conforms to the Specification, this Contract and the Standards. If the
estimated cost of the repair of any such Unit in the reasonable determination
of
Buyer is not greater than the Damage Threshold, Seller will arrange the repair
of such Unit at Seller’s expense or Seller will reimburse the repair amount to
Buyer if Buyer elects to have Buyer or Buyer’s designated repair shop complete
the repair. The repair shall be accomplished in accordance with the latest
Institute of International Container Lessors (“IICL”) repair guide. Buyer
acknowledges that the Equipment cannot be sent back to Seller’s plant in China;
therefore, both parties agree to use their best efforts to settle the damage
issues at the Authorized Delivery Location. Seller shall be responsible to
pay
all costs for the repair, which shall include the costs of inspection,
estimation, transportation (including mounting repaired Equipment on chassis
and
making same available for interchange to Buyer’s motor carrier or drayman at a
location reasonably acceptable to Buyer), and repair of, and any other costs
with respect to the repair of (including chassis costs), the
Equipment.
(g) Subject
to ARTICLE 7(h), Seller will provide free storage after discharge of the
Equipment from the ship at the
destination location of Southern
California in accordance with the terminal’s standard free storage days. The
Buyer shall pay charges for all additional storage after these standard free
storage days.
Buyer
will pay such additional storage charges via wire transfer within ten (10)
days
of Buyer’s receipt of invoice from Seller. The additional storage charge shall
be as per the terminal’s standard tariff. Should Buyer be unable to pickup the
Equipment at the destination location due to an event caused solely by Seller
or
by the occurrence of an event of delay beyond the control of Buyer which Buyer
is unable to prevent through the exercise of due diligence, which delay is
attributable to (i) acts of God (other than ordinary storms or ordinary
inclement weather conditions), earthquakes, lightning or flood; (ii) explosions,
fire or vandalism, provided such explosion, fire or vandalism did not result
from the gross negligence or willful misconduct of Seller; or (iii) strikes
or
other similar industrial disturbances (not including any strikes or industrial
disturbances resulting from unilateral changes made by Seller or its affiliated
companies), riots, insurrections, war, sabotage, blockages or embargoes, and
epidemics, then the parties agree to confer and share equally the additional
storage expense.
(h) Notwithstanding
anything contained in ARTICLE 7(g), if
the
Authorized Delivery Location is
other
than
Southern
California for the delivery of any Equipment, Buyer and Seller acknowledge
that
Seller
may not
be able to obtain twelve (12) calendar days of free storage for Equipment
at
such other Authorized
Delivery
Locations. Accordingly, for any Equipment delivered to Authorized
Delivery
Locations other than Southern
California, Buyer and Seller agree to negotiate the number of free storage
days
for Equipment at such other Authorized
Delivery
Locations, and Buyer shall be responsible
for
any storage in excess of such free storage pursuant to the payment provisions
of
ARTICLE 7(g) above.
(i) At
the
end of each calendar month during which Units of Equipment have been discharged
at port, Seller shall complete a report in respect to Units of Equipment
delivered during such month in the form set forth in Exhibit E or in a form
reasonably acceptable to Buyer, and deliver it by facsimile by the third working
day of the succeeding month to Buyer at Buyer’s address specified in
ARTICLE 17.
8.
Reserved
9.
SCHEDULED DELIVERY DATES
Seller
shall deliver the Equipment to the Buyer as set forth in Exhibit A,
in
accordance with the Scheduled Delivery Dates set forth in Exhibit A, at Seller’s
risk and expense as provided in this Contract, all for the consideration as
specified in Exhibit A.
Buyer
and
Seller agree that Seller shall deliver to Buyer 500 units during each of the
following months: May 2007, June 2007, July 2007 and August 2007.
Buyer
will arrange the necessary chassis to the discharging terminal for stevedoring,
and all necessary arrangement shall be as per discussion between terminal and
Buyer, Seller will inform the terminal contacts in advance.
10.
Reserved
ARTICLE
11.
Payment of the Contract Prices
(a) Payment
of the Contract Price for Units of Equipment which are purchased by Buyer under
this Contract shall be made in U.S. Dollars by wire transfer of immediately
available funds as follows:
(i)
an
amount equal to the Contract Price set forth in Exhibit A shall be paid to
Seller’s account specified by Seller in writing;
(ii)
The
balance of funds held by the The Bank of New York Trust Company, N.A (“Escrow
Agent”) pursuant to that certain Escrow Agreement, dated as of April 10, 2006,
by and among Buyer, Old Seller, and the Escrow Agent (the “2006 Escrow
Agreement”) at any given time shall be referred to herein as the “Escrow Fund.”
Buyer, Old Seller, Seller and Escrow Agent are concurrently entering into an
Amendment to Escrow Agreement (the “Escrow Amendment”) in substantially in the
form attached hereto as Exhibit F pursuant to which the Escrow Fund shall be
made applicable to this Contract as well as the 2006 Purchase Contract. The
2006
Escrow Agreement, as amended by the Escrow Amendment, shall constitute the
Escrow Agreement. The Escrow Fund shall be disbursed in accordance with the
terms of the Escrow Agreement.
(iii)
Buyer shall make the payments specified in (i) above within ten (10) days
following the completed discharge and Buyer’s acceptance of Equipment at the
Authorized Delivery Location specified on Exhibit A (as evidenced by delivery
of
an EIR or
other
confirmation
for such
Units showing delivery in good order in accordance with this Contract),
and Seller’s presentation of the following documents to the Buyer for each
Delivered Unit of accepted Equipment:
| (i) |
Copy
of Commercial Invoice;
|
| (ii) |
Copy
of Bill of Lading;
|
| (iii) |
Inspection
certificate issued by Buyer’s inspectors; and;
|
| (iv) |
Title
to the Units.
|
(b) In
the
event that Buyer fails to make payment within the ten (10) day deadline set
forth in ARTICLE 11(a) above (the “Payment Deadline”) in respect to any
Containers which are accepted by Buyer, the Buyer originally named in this
Contract (i.e., Hub City Terminals, Inc.) shall be obligated to pay to Seller
in
accordance with ARTICLE 11(a)(i) an additional amount equal to the Late Payment
Obligation set forth in Exhibit A for each calendar day beyond the Payment
Deadline that payment in respect to any such Containers is not
paid.
(c)
Buyer
will have 10 days from the date the Units are discharged at an Authorized
Delivery Location and made available to Buyer to complete any initial inspection
desired by Buyer. Buyer will note to Seller in writing any defects in the Units
within such 10 day period and if Buyer fails to note to Seller any defects
in
writing with respect to these Units within such 10 day period these Units will
be deemed to be in acceptable condition upon initial delivery. Nothing in the
foregoing sentences shall in any way limit Buyer’s other rights under this
Agreement, including, without limitation, Buyer’s rights under Section 7(e) and
Section 13.
ARTICLE
12. Customs
Charges, Taxes and Delivery Costs
Seller
shall pay all fees, taxes and delivery charges (including sales, value added,
income (including U. S. income taxes, gross receipts and similar taxes) payable
in connection with the manufacture, transportation, exportation, importation,
delivery and sale of the Equipment including those imposed or assessed by or
in
the countries (including states or provinces and other local taxing authorities)
of origin, manufacture, sale and delivery, except that Buyer shall pay any
charges for the costs, if applicable, of customs clearance, and duties to the
United States of America and sales taxes imposed by the United States and any
state or local taxing authority in the United States. In addition to the
foregoing Seller payment obligations, Seller shall be responsible to pay all
taxes imposed in manufacturing country and delivery costs. Seller requires
that
Buyer use the Equipment in interstate or foreign commerce. When Seller delivers
the Equipment to Buyer at Buyer’s Authorized Delivery Location, Buyer intends to
cause the Equipment to be loaded with freight for transportation in a continuous
movement to a destination outside California.
ARTICLE
13. Warranty
(a) Work
and Material
(i) Seller
warrants and represents that the Equipment will be free from defects in material
and workmanship. Notwithstanding anything contained in this contract to the
contrary, if at any time from delivery of the Equipment to and acceptance
thereof by Buyer to the expiration of five (5) years after delivery and Buyer’s
acceptance, any weakness, deficiency, defect, or breaking down (other than
repairs necessitated solely as a result of ordinary wear and tear), of the
Equipment sold to Buyer under this Contract (an “Equipment Defect”) other than
(i) that caused by the negligence or other improper act of anyone other than
Seller or Seller’s subcontractor, or (ii) as specified in
ARTICLE 13(a)(ii), shall be discovered and reported by Buyer (or by an
independent surveyor as provided ARTICLE 13(b)(ii) below), such Equipment Defect
shall be corrected by Seller to the satisfaction of Buyer in accordance with
the
procedure described in ARTICLE 13(b).
(ii) Seller
also warrants and represents that the paint and finish on the Equipment and
on
the components thereof will be free from coating failures or other defects
which
result in rust, corrosion, peeling paint or non-adhesion of paint or other
coating materials to the surface of the Equipment (collectively, a “Paint
Defect”). Notwithstanding anything contained in this contract to the contrary,
if at any time from and after delivery of the Equipment to Buyer to the
expiration of five (5) years after delivery, any Paint Defect in the Equipment
sold to Buyer under this Contract, other than that caused by the negligence
or
other improper act of anyone other than Seller or Seller’s subcontractors, shall
be discovered and reported by Buyer (or by an independent surveyor as provided
in ARTICLE 13(b)(ii)), such Paint Defect shall be corrected by Seller to the
satisfaction of Buyer in accordance with the procedures described in ARTICLE
13(b), provided that the foregoing shall not apply to repairs necessitated
solely as a result of ordinary wear and tear.
(b) Within
fifteen (15) days after receipt of written notice from Buyer of a claim for
an
Equipment Defect or a Paint Defect (collectively, a “Warranty Defect”), Seller
shall either:
(i) arrange
for repairs or replacement of the Warranty Defect directly, using Seller’s own
employees or contractors. Seller shall notify Buyer within such fifteen (15)
days period of the arrangement made, and such repairs or replacement shall
commence promptly and be concluded promptly; or
(ii) notify
Buyer that Seller disputes the claim of a Warranty Defect. If a dispute about
a
Warranty Defect is not resolved within ten (10) days after delivery of such
notice, Seller shall request Buyer to cause a survey of the Equipment to be
conducted by, at Buyer’s option, Bureau Veritas, American Bureau of Shipping,
Lloyd’s Registry or other recognized authority reasonably acceptable to the
parties, whose decision as to the validity of the claim of Warranty Defect
shall
be binding. If the claim is found to be a Warranty Defect, Seller shall pay
for
the cost of the survey and shall arrange for repairs or replacement in
accordance with ARTICLE 13(b)(i) within five (5) days of the issuance of such
decision. If the claim is found not to be a Warranty Defect, Buyer shall pay
the
cost of survey. Warranty repairs shall be completed by Seller within 90
days.
(c) In
the
event Seller fails to take action as described in ARTICLE 13(b)(i) or (ii)
within the time specified, Buyer, may, but shall not be required to, obtain
estimates from independent repair contractors as to the cost of repairing the
Warranty Defects and restoring the Equipment to conform to the requirements
of
this Contract, as well as estimates of those costs set forth in ARTICLE 13(d)
below. If Buyer elects to obtain such estimates, Buyer shall submit each
estimate to Seller within a reasonable time after receipt by Buyer. Such
estimates shall conclusively determine the costs incurred by Buyer in connection
with such Warranty Defects, and Seller shall pay the amount thereof to Buyer
within thirty (30) days after receipt of each estimate by Seller. If Seller
has
not paid Buyer such amount within thirty (30) days after receipt of an estimate
by Seller, Buyer may withdraw from the Escrow Fund in accordance with the terms
of the Escrow Agreement an amount equal to (i) the amount of such estimate
plus
(ii) any amounts payable pursuant to ARTICLE 13(d). Buyer, at Buyer’s option,
may use any money paid to Buyer pursuant to this ARTICLE 13(c) or ARTICLE 13(d)
to reimburse Buyer for the cost of performing the work itself or may contract
with a third party to have the work performed.
(d) In
addition to the direct costs of repair described in ARTICLE 13(b), Seller shall
also pay and /or reimburse Buyer for all costs incurred by Buyer relating to
repair of such Warranty Defects, including but not limited to, transportation,
mounting on and dismounting from chassis, chassis use costs, inspection and
re-inspection, and costs of materials and labor.
(e) Neither
the inspection or testing as provided in ARTICLE 5, nor technical acceptance
or
final acceptance of the Equipment as described
in ARTICLE 6, nor the issuance of an Inspection Certificate
or
an
EIR,
as
described in ARTICLE 6 or 7, nor approval of Seller’s designs and the
Specification for the Equipment
by
Buyer nor any other course of conduct by Buyer shall be deemed to diminish,
waive or modify any of Buyer’s rights or remedies under this ARTICLE
13.
ARTICLE
14. Patent,
Copyright, Trademarks and Trade Secret Warranty; Infringement
Seller
warrants that the Equipment will not infringe the patent, copyright, trademark
and trade secret rights of any third party. Seller shall defend, indemnify
and
save harmless Buyer and its affiliates, agents, contractors, servants or
employees from and against all loss, cost, liability and claims, plus attorneys’
fees, resulting from any claim that the Equipment, or any material used in
the
construction of the Equipment or incorporated in the Equipment by Seller,
infringes any United States or foreign patent, copyright, trademark or trade
secret rights. If the Equipment or any material incorporated in the Equipment
by
Seller shall be held by a court having jurisdiction to constitute such an
infringement and the use thereof shall be enjoined, Seller shall procure for
Buyer at Seller’s expense (i) the right to continue using the Equipment with any
such infringement, (ii) replace infringing material with non-infringing material
having equal or better utility, function and value, or (iii) modify the
Equipment so it becomes non-infringing, as may be required to eliminate all
problems of infringement while maintaining the same or better utility, function
or value. Prompt written notice of the assertion of any claim or the bringing
of
any suit shall be given by Buyer to Seller, and thirty (30) days shall be given
to Seller from giving of such notice to settle or defend it as Seller may see
fit provided Seller provides Buyer with an acceptable indemnity in Buyer’s
discretion. Buyer, at Seller’s expense, shall provide every reasonable
assistance in settling or defending such claim or suit. If, at the end of thirty
(30) days, Seller fails to effect such settlement or defense, Buyer may
undertake settlement or defense as it sees fit, with full reimbursement for
damages, costs and attorneys’ fees as herein provided.
ARTICLE
15. Seller’s
Default
(a) Each
of
the following shall constitute an act of default by Seller under this Contract
(a “Seller Default”):
(i) The
failure of Seller to manufacture the Equipment with such diligence and in such
manner as required by this Contract and the Specification and/or the Standards
as will enable it to complete the delivery of the Units in accordance with
the
Scheduled Delivery Dates, except and to the extent that such failure is due
to
one or more Excusable Delays, which default continues un-remedied for a period
of thirty (30) days after written notice to Seller thereof;
(ii) If
due to
the failure of Seller to perform its obligations hereunder the Units of
Equipment scheduled for delivery in any month pursuant to the Scheduled Delivery
Dates have not been delivered within sixty (60) days after the end of the
month;
(iii) Seller
fails to repair or replace a Warranty Defect as provided in ARTICLE
13;
(iv) Any
other
material default by Seller to perform or satisfy its obligations and conditions
under this Contract, which default continues un-remedied for a period of thirty
(30) days after written notice to Seller thereof;
(v) Any
breach of any warranty by Seller; or
(vi) Seller
or
any affiliate involved in the manufacturing of the Equipment (“Key Affiliate”)
is dissolved or makes a general assignment for the benefit of its creditors;
a
receiver or custodian of any kind whatsoever is appointed, whether or not
appointed in bankruptcy, common law or equity proceedings, whether temporary
or
permanent, for a substantial portion of the property of Seller or a Key
Affiliate; Seller or a Key Affiliate files a petition for relief under any
chapter of the U.S. Bankruptcy Code or similar law; a petition for relief is
filed against Seller or a Key Affiliate and such petition is not dismissed
by
the court within sixty (60) days after the date on which such petition was
filed; the admission by Seller or a Key Affiliate in writing of its inability
to
pay debts generally as they become due; the failure of Seller or a Key Affiliate
generally to pay its debts as they become due; or if Seller fails to assume
this
Contract within thirty (30) days after the filing of a petition by or against
Seller under the U.S. Bankruptcy Code or similar law.
(b) Right
to Terminate
In
the
event that a Seller Default shall occur, at Buyer’s option, Buyer may elect to
cancel this Contract.
(c) Additional
Remedies
The
rights conferred upon Buyer under the terms of this ARTICLE 15 shall not be
exclusive of any other remedies in law or equity, which might be otherwise
available to Buyer (including all rights and remedies of Buyer under the Uniform
Commercial Code) upon the happening of a Seller Default. The failure of Buyer
to
exercise any of the rights conferred upon it in this ARTICLE 15 with respect
to
a Seller Default shall not constitute a waiver of any rights of Buyer with
respect to any other Seller Default under this Contract.
ARTICLE
16. Buyer’s
Default; Actions by Seller upon Buyer Default
(a) Buyer
Default
The
following shall constitute an act of default by Buyer under this Contract (a
“Buyer Default”): Failure by Buyer to make any proper payment to Seller required
under the provisions of this Contract which failure continues unremedied for
a
period of thirty (30) days after written notice to Buyer thereof.
(b) Rights
to Stop Work and to Terminate
In
the
event that a Buyer Default shall have occurred and be continuing, Seller, if
it
is not in default in the performance of any of its obligations under this
Contract, (i) shall have, upon prior written notice to Buyer, the right to
slow
or to stop production of Units, and the Scheduled Delivery Dates as provided
in
ARTICLE 9 shall, without prejudice to Seller’s right to recover damages
therefor, be extended by additional time equal to the period of the continuance
of such Buyer Default, and (ii) if such Buyer Default shall continue for more
than thirty (30) days after written notice thereof by Seller to Buyer, Seller
may, without prejudice to its rights to recover damages therefor from Buyer,
terminate this Contract as to the undelivered Units of Equipment by written
notice to Buyer.
(c) Alternative
Remedies
The
right
conferred upon Seller under the terms of this ARTICLE 16 shall not be exclusive
of any other remedies in law or equity, which might be otherwise available
to
Seller upon the happening of a Buyer Default. The failure of Seller to exercise
any of the rights conferred upon it in this ARTICLE with respect to a Buyer
Default shall not constitute a waiver of any right of Seller with respect to
any
other Buyer Default under this Contract.
ARTICLE
17. Notices
Until
Seller shall designate otherwise in writing to Buyer, all notices under this
Contract directed to Seller shall be in writing and shall be (i) personally
delivered to Seller or (ii) mailed by first class certified mail, return receipt
requested, postage prepaid, or delivered by facsimile, with confirmation of
receipt requested, to the following address:
Singamas
Management
Services, Ltd.
Andy
Chan/Vice President of Marketing
c/o
19/F., Dah Sing Financial Centre,
108
Gloucester Road
Hong
Kong
British
Virgin Islands
Facsimile
Number: 852-2598-7847
Until
Buyer shall hereafter designate otherwise in writing to Seller, all notices
under this Contact directed to Buyer shall be in writing and shall be (i)
personally delivered to Buyer’s CFO (“Buyer’s Authorized Representative”) at the
address specified below or (ii) mailed by first class certified mail, return
receipt requested, postage prepaid, or delivered by facsimile, with confirmation
of receipt requested, to the following address:
|
Hub
Group, Inc.
|
And
|
Hub
Group, Inc.
|
|
Attn:
CFO
|
Attn:
General Counsel
|
|
|
3050
Highland Parkway
|
3050
Highland Parkway
|
|
|
Suite
100
|
Suite
100
|
|
|
Downers
Grove, IL 60515
|
Downers
Grove, IL 60515
|
|
|
Facsimile
Number 630-964-6475
|
Facsimile
Number 630-964-6475
|
All
notices given pursuant to this ARTICLE shall be deemed to have been received
on
the date of delivery if delivered in person, upon acknowledgment thereof if
delivered by facsimile, or on the fifth day after the date of mailing by U.S.
registered mail, return receipt requested if mailed and the sender has received
the return receipt with notation thereon of delivery.
ARTICLE
18. Assignment
(a) This
Contract shall not be assigned by either party without the written consent
of
the other party, which consent shall not be withheld unreasonably except that
Buyer may, without the consent of Seller, assign this Contract to (i) any
affiliate of Buyer or (ii) one or more financial institutions that provide
or
arrange for the financing of the Equipment for the benefit of Buyer or an
affiliate of Buyer, whether structured as a secured loan, finance lease or
lease
purchase; provided that in the case of any such assignment Buyer shall remain
bound and liable to Seller for Buyer’s obligations under this Contract. Seller
will upon request of Buyer cooperate in effecting any assignment authorized
pursuant to this ARTICLE 18 and will execute any agreements or other instruments
(including, without limitation, any supplement or amendment to or novation
of
this Contract) that may be required in order to give effect to or perfect any
such assignment.
(b) Notwithstanding
any assignment by Buyer to a financial institution pursuant to clause (ii)
of
paragraph (a) of this ARTICLE 18, the Buyer originally named in this Contract
(i.e., Hub City Terminals, Inc.), and not any such financial institution, shall
remain solely responsible for any Late Payment Obligation under ARTICLE 11
above.
ARTICLE
19. Miscellaneous
The
validity, interpretation and performance of this Contract shall be determined
in
accordance with the laws of the State of California, USA, without application
of
its conflicts of laws principles.
Jurisdiction.
Any dispute in any manner relating to the foregoing shall be resolved by final
and binding arbitration under the rules of the American Arbitration Association.
The arbitral award may be enforced in any court with jurisdiction over the
person or the property of the person against whom enforcement is sought;
provided, however, that with respect to any suit, action or proceeding relating
to this Contract, each party hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of Illinois and the United States
District Court for the Northern District of Illinois. Service of process in
any
such arbitration may be served in the same manner as notices are required to
be
served under Article 17 of this Contract.
Counterparts.
This Contract may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all
such
counterparts shall together constitute but one and the same
instrument.
Amendments,
Etc.; Entire Agreement. This Contract contains the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings between the parties, whether written or oral.
This
contract or any of the terms hereof may not be terminated, amended,
supplemented, waived or modified orally, but only by a written instrument which
purports to terminate, amend, supplement, waive or modify this Contract, or
any
of the terms hereof, signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is
sought.
Severability
of Provisions. Any provision of this Contract which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the
remaining provisions hereof or affecting the validity or enforceability of
such
provision in any other jurisdiction.
Headings,
Etc. The headings used herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
Further
Assurances. Seller and Buyer shall do and perform such further acts and execute
and deliver such further instruments as may be required by applicable law or
reasonably requested by either party to carry out and effectuate the purposes
of
this Contract.
Survival.
The representations, warranties, covenants and indemnities of the parties
contained in this Contract shall survive execution and delivery of this
Contract.
Buyer
and
Seller have caused this Contract to be executed in two counterparts as of the
date
and
year
written
|
Hub
City Terminals, Inc.
|
Singamas
Management Services, Ltd.
|
|
As
Buyer
|
As
Seller
|
|
By:
/s/ David P. Yeager
|
By:
/s/ Andy Chan
|
|
Name:
David P. Yeager
|
Name: Andy
Chan
|
|
Title:
CEO
|
Title:
Vice President of Marketing
|
FOR
ARTICLE 11 ONLY:
|
Singamas
North America, Inc.
|
|
As
Old Seller
|
|
By:
/s/ Young Man Kwak
|
|
Name:
Young Man Kwak
|
|
Title:
Representative
|